JournalEntries

JournalisawordderivedfromLatinword,itmeansdailyrecordedbook.Recordingisthe
basicfunctionataccounting.

Entrymeansasummaryofbusinesstransaction.Journalentriesalsocalledprimeentries.

Rulesforjournalentries
Accounts

Accountsbroadlydividedintotwocategories.Theyare(i)PersonalAccounts(ii)Impersonal
AccountsagainImpersonalAccountsdividedintoa)RealAccountb)NominalAccount.
VariousrulesandtypesofAccountsshowedinadiagramformatasfollows

PersonalAccounts
NaturalPersonalAccounts:SreenivasA/c,RajeshA/c,RaniA/c,Shobanetc.
ArtificialPersonalAccounts:R.S.Brothers,J.CBrothers,SreenidhiengineeringCollegeetc.
RepresentativePersonalAccounts:PrepaidSalaries,outstandingWagesetc.

Rule
DebittheReceiver

CredittheGiver

Ex:Rs5,000/DepositedinS.B.H
S.B.HA/c

Dr

ToCashA/c

5,000

5,000

ImpersonalAccounts
RealAccount:
AllthepropertiesofBusinesswillcomeunderRealAccountEx:Cash,Buildings,Land,andMachinery
etc.

Rule
Debitwhatcomesintothe

Creditwhatgoesoutfrom

Organization

Ex:ComputerPurchasedRs20,000/
ComputerA/c Dr

20,000

ToCashA/c

20,000

theorganization

NominalAccount:
Salariespaid,commissionreceived,Discountallowedetc

Rule
Debitallexpensesandlosses

Creditallincomesandgains

EntriesinPersonalAccounts
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.

Rs20,000/depositedinAndhraBankon23062010
Rs20,000/withdrawnfromI.C.I.C.Ion24062010
SrinivascommencedbusinesswithcashRs1,00,000
ReceivedcashfromGoyalRs8,000onaccount
IssuedchequetoshobanRs7,500
CashwithdrawnfromofficeforpersonaluseRs1,000andwithdrawnRs15,000fromBank
GoodswithdrawnforpersonaluseRs.2,000
GoodsreturnedtoAjay2,000
GoodsreturnedbyDeepak1500
ReceivedcashfromVishwanadam,Alloweddiscount4,400and100.
PaidRajagopalanbychequeanddiscountallowedbyhim4,900and100respectively
OutstandingforSalariesRs3,000
PaidtoSureshRs1500

CompoundEntries:Sometimesthereareanumberoftransactionsonthesamedaterelatingtoone
particularaccountorofoneparticularnature.Suchtransactionsmayberecordedbymeansofasingle
JournalentryinsteadofpassingseveralJournalentries.
14. PaymentmadetoRamRs1,000.HeallowedacashdiscountofRs50.
15. CashreceivedfromsreenivasRs800andallowedhimRs50asdiscount.
16. ArunningbusinesswaspurchasedbymohanwiththefollowingAssets&Liabilities.
CashRs2,000;LandRs4,000;FurnitureRs1,000;StockRs2,000;CreditorsRs1,000;Bank
overdraftRs2,000.

JournalBook
Dr

Date
230610

240610

250610

260610

270610

280610

280610

290610

300610

300610

010710

010710

020710

020710

Particulars
L.F
AndhraBankA/cDr
ToCashA/c

[BeingcashdepositedinAndhraBank]
CashA/cDr
ToICICIA/c

[BeingcashwithdrawnfromICICI]
CashA/cDr
ToSreenivasCapitalA/c

[BeingcommencementofBusiness]
CashA/cDr
ToGoyalA/c

[BeingcashreceivedfromGoyal]
ShobhanA/cDr
ToBankA/c

[BeingchequeissuedtoShobhan]
DrawingsA/cDr
ToCashA/c

[Beingcashwithdrawnfromofficeforpersonal
use]
DrawingsA/cDr
ToBankA/c

[Bingcashwithdrawnfrombankforpersonaluse]
DrawingsA/cDr
ToGoodsA/c

[Beinggoodswithdrawnforpersonaluse]
AjayA/cDr
ToPurchaseReturnsA/c

[BeingpurchasereturnstoAjay]
SalesReturnsA/cDr
ToDeepakA/c

[BeingSalesReturnsfromDeepak]
RajagopalA/cDr
ToBankA/c

[BeingchequeissuedtoRajaGopal]
RajagopalA/cDr
ToDiscountA/c

[BeingDiscountallowedbyhim]
CashA/cDr
ToVishwanadamA/c

[Beingcashreceivedfromvishwanadam]
DiscountA/cDr
ToVishwanadamA/c

[BeingDiscountallowedtovishwanadam]

Debit

Cr
Credit

20,000

20,000

20,000

20,000

1,00,000

1,00,000

8,000

8,000

7,500

7,500

1,000

1,000

15,000

15,000

2,000

2,000

2,000

2,000

1,500

1,500

4,900

4,900

100

100

4,400

4,400

100

100

030710

040710

050710

060710

070710

SalariesA/cDr
ToOutstandingSalariesA/c
[BeingSalariesoutstanding]
SureshA/cDr
ToCashA/c
[BeingcashpaidtoSuresh]
RamA/cDr
ToCashA/c
ToDiscountA/c
[BeingpaymenttoRamRs1,000andheallowed
Rs50asdiscount]
CashA/cDr
DiscountA/cDr
ToSureshA/c
[BeingcashreceivedfromSureshRs800and
discountallowedRs50]
CashA/cDr
LandA/cDr
FurnitureA/cDr
StockA/cDr
ToCreditorsA/c
ToBankO.DA/c
ToCapitalA/c
[BeingcommencementofBusinessbymohanby
takingoverarunningbusiness]
Note:ThedifferencebetweenAssets&Liabilities
iscalledCapital.

3,000

3,000

1,500

1,500

1,050

1,000
50

800
50

850

2,000
4,000
1,000
2,000

1,000
2,000
6,000

EntriesinRealAccount
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.

PurchasedgoodsforcashRs25,000
PurchasedgoodsoncreditRs10,000
PurchasedFurnitureforcashRs.5,000
PurchasedMachineryfromManojoncreditRs40,000
SoldgoodstoRamaoncreditRs8,000
PurchasedgoodsfromManishforcashRs5,000
SoldgoodsforcashtoSaileshRs8,500
PurchasedMachineryfromAjayEngineeringCompany,paymentmadebychequeRs20,000
CashsalesRs6,000
SalestoKrishnamurthyRs1500
PurchasesfromSitaramRs1600
PurchasedMachinery,paymentmadebycheque3,000
Purchases3,000
Sales4,000
PurchaseReturnsRs3000
SalesReturnsRs4000

JournalBook
Dr

Date
02022011

03022011

04022011

05022011

06022011

07022011

08022011

09022011

10022011

11022011

12022011

13022011

14022011

Particulars

PurchasesA/cDr
ToCashA/c
[Beinggoodspurchasedforcash]
PurchasesA/cDr
ToCreditorsA/c
[BeinggoodspurchasedforCredit]
FurnitureA/cDr
ToCashA/c
[BeingFurniturepurchasedbycash]
MachineryA/cDr
ToManojA/c
[BeingMachinerypurchasedonCredit]
RamaA/cDr
ToSalesA/c
[BeinggoodssoldtoRamaonCredit]
PurchasesA/cDr
ToCashA/c
[Beinggoodspurchasedforcash]
CashA/cDr
ToSalesA/c
[Beinggoodssoldforcash]
MachineryA/cDr
ToBankA/c
[BeingMachinerypurchased&Payment
madebycheque]
CashA/cDr
ToSalesA/c
[Beinggoodssoldforcash]
KrishnamurthyA/cDr
ToSalesA/c
[Beinggoodssoldforcredit]
PurchasesA/cDr
ToSitaramA/c
[Beinggoodspurchasedforcredit]
MachineryA/cDr
ToBankA/c
[BeingMachinerypurchased,payment
madebycheque]
PurchaseA/cDr
ToCashA/c
[Beinggoodspurchasedforcash]

L.F

Debit

25,000

Cr

Credit
25,000

10,000

10,000

5,000

5,000

40,000

40,000

8,000

8,000

5,000

5,000

8,500

8,500

20,000

20,000

6,000

6,000

1,500

1,500

3,000

3,000

3,000

3,000

3,000

3,000


15022011

16022011

17022011

CashA/cDr
ToSalesA/c
[Beinggoodssoldoutforcash]
CashA/cDr
ToPurchaseReturnsA/c
[Beinggoodsreturned]
SalesReturnsA/cDr
ToCashA/c
[BeingGoodsreturned]

4,000

4,000

3,000

3,000

4,000

4,000

EntriesinNominalAccount

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

SalariespaidRs.3,000
InterestreceivedRs.1,000
DepreciateFurniturebyRs.500
Discountallowed2,500
PaidrenttolandlardRs.500
ReceivedinterestfromAshokRs.700
PaidRenttolandlardbychequeRs.6000
PaidFireInsurancePremium200/
Cashpaidforadvertising500/
DividendReceived5000/

Note:InNominalAccountweshouldnotwritenameofthepersonorfirmorpartyinJournalentryeven
thoughhe/sheispaysorreceives.

Rule:DrExpenses&Losses

CrIncomes&Gains

JournalBook
Dr

Date

01032011

02032011

03032011

04032011

05032011

06032011

07032011

08032011

09032011

10032011

Particulars
SalariesA/cDr
ToCashA/c
[BeingSalariespaid]
CashA/cDr
ToInterestA/c
[BeingInterestreceived]
DepreciationonFurnitureA/cDr
ToFurnitureA/c
[BeingDep.Onfurniturecharged]
DiscountA/cDr
ToCashA/c
[Beingdiscountallowed]
RentA/cDr
ToCashA/c
[Beingrentpaidtolandlord]
CashA/cDr
ToInterestA/c
[BeingInterestreceivedfromAshok]
RentA/cDr
ToBankA/c
[Beingrentpaidbycheque]
InsuranceA/cDr
ToCashA/c
[BeingInsurancepremiumpaid]
AdvertisingA/cDr
ToCashA/c
[BeingAdvertisingExpensespaid]
CashA/cDr
ToDividendA/c
[BeingDividendReceived]

Cr

L.F

Debit

Credit

3,000

3,000

1,000

1,000

500

500

2,500

2,50

500

500

700

700

6,000

6,000

200

200

500

500

5,000

5,000